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The zones of discrimination for M-Score is as such:
An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.
During the past 8 years, the highest Beneish M-Score of Verisk Analytics Inc was -2.10. The lowest was -2.93. And the median was -2.64.
The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.
The M-Score Variables:
The M-score of Verisk Analytics Inc for today is based on a combination of the following eight different indices:
|M||=||-4.84||+||0.92 * DSRI||+||0.528 * GMI||+||0.404 * AQI||+||0.892 * SGI||+||0.115 * DEPI|
|=||-4.84||+||0.92 * 1.2139||+||0.528 * 0.9817||+||0.404 * 1.2993||+||0.892 * 1.1612||+||0.115 * 1.0403|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0795||+||4.679 * -0.0431||-||0.327 * 1.0762|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $266 Mil.|
Revenue was 550.401 + 497.65 + 459.397 + 464.864 = $1,972 Mil.
Gross Profit was 340.234 + 302.454 + 275.181 + 271.282 = $1,189 Mil.
Total Current Assets was $618 Mil.
Total Assets was $5,619 Mil.
Property, Plant and Equipment(Net PPE) was $392 Mil.
Depreciation, Depletion and Amortization(DDA) was $185 Mil.
Selling, General & Admin. Expense(SGA) was $286 Mil.
Total Current Liabilities was $1,541 Mil.
Long-Term Debt was $2,293 Mil.
Net Income was 131.814 + 163.32 + 98.686 + 97.37 = $491 Mil.
Non Operating Income was 17.912 + 84.966 + -0.538 + 0.076 = $102 Mil.
Cash Flow from Operations was 164.543 + 84.511 + 270.99 + 110.817 = $631 Mil.
|Accounts Receivable was $189 Mil.
Revenue was 448.665 + 423.554 + 409.643 + 416.723 = $1,699 Mil.
Gross Profit was 267.792 + 251.084 + 239.97 + 246.567 = $1,005 Mil.
Total Current Assets was $706 Mil.
Total Assets was $2,678 Mil.
Property, Plant and Equipment(Net PPE) was $281 Mil.
Depreciation, Depletion and Amortization(DDA) was $141 Mil.
Selling, General & Admin. Expense(SGA) was $228 Mil.
Total Current Liabilities was $561 Mil.
Long-Term Debt was $1,136 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(266 / 1972.312)||/||(188.711 / 1698.585)|
2. GMI = Gross Margin Index
Measured as the ratio of gross margin in year t-1 to gross margin in year t.
Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(302.454 / 1698.585)||/||(340.234 / 1972.312)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (617.762 + 391.625) / 5619.097)||/||(1 - (705.652 + 281.347) / 2677.7)|
4. SGI = Sales Growth Index
Ratio of sales in year t to sales in year t-1.
Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.
5. DEPI = Depreciation Index
Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.
DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.
|DEPI||=||(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1))||/||(Depreciation_t / (Depreciaton_t + PPE_t))|
|=||(141.234 / (141.234 + 281.347))||/||(185.369 / (185.369 + 391.625))|
6. SGAI = Sales, General and Administrative expenses Index
The ratio of SGA expenses in year t relative to year t-1.
SGA expenses index > 1 means that the company is becoming less efficient in generate sales.
|SGAI||=||(SGA_t / Sales_t)||/||(SGA_t-1 /Sales_t-1)|
|=||(285.842 / 1972.312)||/||(228.051 / 1698.585)|
7. LVGI = Leverage Index
The ratio of total debt to total assets in year t relative to yeat t-1.
An LVGI > 1 indicates an increase$sgai= in leverage
|LVGI||=||((LTD_t + CurrentLiabilities_t) / TotalAssets_t)||/||((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)|
|=||((2292.892 + 1540.758) / 5619.097)||/||((1136.205 + 561.34) / 2677.7)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(491.19 - 102.416||-||630.861)||/||5619.097|
An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.
Verisk Analytics Inc has a M-score of -2.26 suggests that the company will not be a manipulator.
Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations
Verisk Analytics Inc Annual Data
Verisk Analytics Inc Quarterly Data